Ireland is not the US and likely did not have the complexity of of the US taxation situation 20 or more years ago.I can definitely appreciate wanting to keep the tax code simple. I did not consider that introducing inflation would make it too complex. So I suppose that is the answer I was looking for. Although, it seems that Ireland did keep inflation in mind, up to a point, unless I have misunderstood that post. So it seems like a workable approach that's not too complex is possible in some cases, no? Was it easier in Ireland due to the the smaller size of that country, economy, etc.? Or did they eventually get rid of it because it wasn't workable in the long term?
It still seems wrong to me to charge someone tax on something that's lost value, even though the price went up, though. I am not looking to avoid taxes, I am not in the situation where I can cash in on any investments. It just seems wrong to me, at first glance, to charge someone taxes on profits that are actually not profits at all when you examine the situation closer. i.e. the value of the investment going down, while the price goes up (due to inflation). If you buy a stock for $100 and all of a sudden there's massive inflation and the cost of everything doubles overnight, you then selling that stock for $200 yields you no profits at all. Yet you'd be taxed on the $100 that's a "profit". See what I mean?
Here in Canada we actually don't pay taxes on lottery winnings at all. But that's another tangent.
Market transactions are always in current dollars and reflect the willingness of potential buyers to pay X price. The expected future value of the investment is reflected in the price. Investments do not have any intrinsic absolute value. Inflation usually does not cause "value" to go down. Buyer expectations of future prices are more important. You seem to be assuming that inflation will drive market prices of investments up. that does not seem to be the case. Inflation will usually drive stock prices down (bad economic times). Particular stocks can be impacted sudden increase or decrease in demand. DJT stock? If art is the item in question, then we have seen that having more rich people with lots and lots of money to invest has inflated Art market prices in a big way without any relation to actual inflation.
If we are talking about a specific item bought as an investment, that would need to be identified before assessing its change in price. Without more information about the nature of the investment, it is difficult to draw conclusions about what drives its capital gains.